CXCL12-CXCR4 signaling controls multiple physiological processes and its dysregulation is associated with cancers and inflammatory diseases. To discover as-yet-unknown endogenous ligands of CXCR4, we screened a blood-derived peptide library for inhibitors of CXCR4-tropic HIV-1 strains. This approach identified a 16 amino acid fragment of serum albumin as an effective and highly specific CXCR4 antagonist. The endogenous peptide, termed EPI-X4, is evolutionarily conserved and generated from the highly abundant albumin precursor by pH-regulated proteases. EPI-X4 forms an unusual lasso-like structure and antagonizes CXCL12-induced tumor cell migration, mobilizes stem cells, and suppresses inflammatory responses in mice. Furthermore, the peptide is abundant in the urine of patients with inflammatory kidney diseases and may serve as a biomarker. Our results identify EPI-X4 as a key regulator of CXCR4 signaling and introduce proteolysis of an abundant precursor protein as an alternative concept for chemokine receptor regulation.